Expedia ticks modest growth in 2017, now charting "new direction"

Expedia Inc.’s revenue increased 11% in the fourth quarter
of 2017 compared to a year prior – up to $2.32 billion – but the diverse online
travel company still missed analysts’ expectations by $40 million.

For the full year, revenue grew 15% in 2017 to more than $10
billion, but that’s modest compared to the pace in 2016 when revenue was up
31%.

It’s a similar story for EBITDA.

Expedia reports a 2017 figure of $1.7 billion, up 6% from
2016 – but that’s a fraction of the growth in EBIDTA from 2015 to 2016 which
came in at 46%.

Digging into the Expedia’s portfolio reveals the stars of
the revenue growth year-to-year were HomeAway, with a 32% jump to $906 million,
and Trivago at 40% to $1.17 billion.

Gross bookings were up 14% in the fourth quarter to $19.8
billion, driven by a massive 47% growth at HomeAway bringing it to $8.7 billion
for the full year. There was lesser but notable growth at Brand Expedia,
Hotels.com, Expedia Affiliate Network and Egencia.

Importance of accommodation

Lodging makes up the bulk of the company’s revenue (68%), with
advertising and media at 11%, air at 8% and all other revenues filling the
remaining 13%.

Lodging revenue increased 14% in 2017 but was partially
offset by a 2% decrease in revenue per room night. Advertising and media revenue increased 33% in 2017 due to
continued growth in Trivago and Expedia Media Solutions.

All other revenue
increased 16% in 2017 reflecting growth in travel insurance and car rental
products. At the bottom of the list - air revenue, with an increase of just 1% in 2017 on a 4% increase in air tickets sold, partially offset by a 3% decrease in revenue per ticket.

CEO and president Mark Okerstrom, who is still fairly new to
the role after Dara Khosrowshahi quit in the summer of 2017 to run ride-hail
giant Uber, says the company is now operating in a "new direction".

In particular, he claims Expedia Inc. is focusing on its
"highest priority markets" and is ramping up the pace of adding new
properties to its accommodation inventory.

In Okerstrom’s first few months, Expedia Inc.’s share price
took a fairly hefty tumble (as did other online travel stocks) as investors
raised concerns over apparent strains on the hotel end of the market.

The company's share price has since recovered about half of its
losses from that period in the fall of 2017.